Friday, August 23, 2024 / by Teresa Pileggi
Top Things to Negotiate When Buying a Home
Top Things to Negotiate When Buying a Home
Price is the most integral aspect that most homebuyers strive to bring as down as possible. However,
there are other negotiable things that you should focus on, especially when buying a home in a highly
competitive market. For instance, when the seller receives multiple offers, negotiating the listing price
alone will not make you stand out from other potential buyers.
So, what else can you negotiate to get your dream home at the best price? According to most real
estate experts, the best way to win a negotiation is to touch what moves the seller the most. Therefore,
whether you are purchasing your first home or a vacation property, here are the most negotiable items
to consider.
1. Home Repairs and Upgrades
Once you identify your dream home, you will likely forgo the home inspection step to speed up the
transaction or appear unique to the seller. However, this is risky as you may end up moving into a
house that turns out to be a money-consuming pit. Including a home inspection contingency in your offer is vital to eliminate future regrets.
A home inspection contingency allows you to identify all significant issues with the home before
finalizing the deal. Once you have the inspection report, you can negotiate with the seller to see if
they can cut the price or cater to the repair costs. The secret is to negotiate based on significant issues
that can bring down the final price as low as possible. These include:
? A leaking roof that needs an entire replacement or a major fix.
? A busted water heating system.
? An outdated security system that needs replacement.
? Fixtures such as refrigerators, chandeliers, and outdoor furniture that you want to be included in the purchase agreement.
2. Mortgage Rates and Fees
Skyrocketing mortgage rates and lender fees have pushed many players out of the market, with most
buyers waiting for a possible decline before they can buy homes. Not known to many, these rates and
fees are flexible, and buyers can negotiate them. For instance, most lenders allow buyers to negotiate
interest rates since they want to remain in business.
The need for more homebuyers also means lenders and sellers compete for a limited number of buyers
in one market. Therefore, as a buyer, you can have a large room to negotiate mortgage rates and
lender fees using the following tactics.
? Shopping around and getting at least four quotes from mortgage facilities that offer the lowest
rates.
? Check if the lender allows you to negotiate loan origination and application fees.
? Checking if the seller can pay for a "buydown" fee that can lower your mortgage rate at closing.
3. Home Warranties
A home warranty can be a minor home aspect to consider during the initial transaction steps, but it is
also a significant item to negotiate with the seller. Although home warranties can cost a few dollars
depending on the size of the home, it can be a win for the buyer if the sellers agree to pay for them.
Therefore, when negotiating the deal, see if the seller can pay for or part of the home warranties.
Home warranties can cover the cost of repairing or replacing vital home components included in the
coverage. This gives you peace of mind and financial protection by ensuring you live in a home with
guaranteed coverage in case of major breakdowns. Common ways you can negotiate home warranties
include:
? Ask the seller if they can provide a credit at closing, especially if you want to use your
preferred home warranty company.
? Asking the seller if they can pay for home warranties for a certain period as part of the
purchase agreement.
4. Closing Costs and Time
Closing costs can be a financial burden to most buyers, especially after paying a hefty down payment
and earnest money. The buyer usually pays the largest share of closing costs, between 5% and 6% of
the home's price. Fortunately, as a buyer, you can negotiate with the seller to cover part of your
closing costs.
You can also offer to move the closing date as close as possible, especially if you have more
flexibility than the seller. Some sellers also find it stressful to sell and buy a home to move in
simultaneously, and offering flexibility in the closing date can give you an upper hand in the
negotiation. Some ways to negotiate closing costs and timelines include:
? Ask the seller to pay the most closing costs through seller financing. However, this tactic
requires you to make a competitive offer.
? Offering the seller a short rent back to allow them enough time to plan before moving out of
the house.
The Bottom Line
Winning a home purchase negotiation is a demanding task for most buyers. That is especially true
when buying in a seller's market where sellers have more bids on their listings. Therefore, you need
strong negotiation skills and an attractive offer highlighting the most crucial items that can move
sellers to get the best deal. Fortunately, negotiating the items above can help you win an impossible
bid and buy a home at the best price possible.
Price is the most integral aspect that most homebuyers strive to bring as down as possible. However,
there are other negotiable things that you should focus on, especially when buying a home in a highly
competitive market. For instance, when the seller receives multiple offers, negotiating the listing price
alone will not make you stand out from other potential buyers.
So, what else can you negotiate to get your dream home at the best price? According to most real
estate experts, the best way to win a negotiation is to touch what moves the seller the most. Therefore,
whether you are purchasing your first home or a vacation property, here are the most negotiable items
to consider.
1. Home Repairs and Upgrades
Once you identify your dream home, you will likely forgo the home inspection step to speed up the
transaction or appear unique to the seller. However, this is risky as you may end up moving into a
house that turns out to be a money-consuming pit. Including a home inspection contingency in your offer is vital to eliminate future regrets.
A home inspection contingency allows you to identify all significant issues with the home before
finalizing the deal. Once you have the inspection report, you can negotiate with the seller to see if
they can cut the price or cater to the repair costs. The secret is to negotiate based on significant issues
that can bring down the final price as low as possible. These include:
? A leaking roof that needs an entire replacement or a major fix.
? A busted water heating system.
? An outdated security system that needs replacement.
? Fixtures such as refrigerators, chandeliers, and outdoor furniture that you want to be included in the purchase agreement.
2. Mortgage Rates and Fees
Skyrocketing mortgage rates and lender fees have pushed many players out of the market, with most
buyers waiting for a possible decline before they can buy homes. Not known to many, these rates and
fees are flexible, and buyers can negotiate them. For instance, most lenders allow buyers to negotiate
interest rates since they want to remain in business.
The need for more homebuyers also means lenders and sellers compete for a limited number of buyers
in one market. Therefore, as a buyer, you can have a large room to negotiate mortgage rates and
lender fees using the following tactics.
? Shopping around and getting at least four quotes from mortgage facilities that offer the lowest
rates.
? Check if the lender allows you to negotiate loan origination and application fees.
? Checking if the seller can pay for a "buydown" fee that can lower your mortgage rate at closing.
3. Home Warranties
A home warranty can be a minor home aspect to consider during the initial transaction steps, but it is
also a significant item to negotiate with the seller. Although home warranties can cost a few dollars
depending on the size of the home, it can be a win for the buyer if the sellers agree to pay for them.
Therefore, when negotiating the deal, see if the seller can pay for or part of the home warranties.
Home warranties can cover the cost of repairing or replacing vital home components included in the
coverage. This gives you peace of mind and financial protection by ensuring you live in a home with
guaranteed coverage in case of major breakdowns. Common ways you can negotiate home warranties
include:
? Ask the seller if they can provide a credit at closing, especially if you want to use your
preferred home warranty company.
? Asking the seller if they can pay for home warranties for a certain period as part of the
purchase agreement.
4. Closing Costs and Time
Closing costs can be a financial burden to most buyers, especially after paying a hefty down payment
and earnest money. The buyer usually pays the largest share of closing costs, between 5% and 6% of
the home's price. Fortunately, as a buyer, you can negotiate with the seller to cover part of your
closing costs.
You can also offer to move the closing date as close as possible, especially if you have more
flexibility than the seller. Some sellers also find it stressful to sell and buy a home to move in
simultaneously, and offering flexibility in the closing date can give you an upper hand in the
negotiation. Some ways to negotiate closing costs and timelines include:
? Ask the seller to pay the most closing costs through seller financing. However, this tactic
requires you to make a competitive offer.
? Offering the seller a short rent back to allow them enough time to plan before moving out of
the house.
The Bottom Line
Winning a home purchase negotiation is a demanding task for most buyers. That is especially true
when buying in a seller's market where sellers have more bids on their listings. Therefore, you need
strong negotiation skills and an attractive offer highlighting the most crucial items that can move
sellers to get the best deal. Fortunately, negotiating the items above can help you win an impossible
bid and buy a home at the best price possible.
